Edinburgh, Nottingham and Manchester lead the way on house price growth

Edinburgh (+8.1%), Nottingham (+8.0%) and Manchester (+7.4%)have seen above average growth in the year to March 2018.

The Hometrack UK Cities House Price Index found that these three cities have boosted overall city house price inflation. It was at +5.5% for the 12 months to March 2018, up from +3.7% a year earlier.

Meanwhile, at the other end of the spectrum, Aberdeen (-6.6%), Cambridge (-1.2%) and London (+1.6%) are lagging behind, despite evidence of the usual seasonal increase in housing sales across the country in the first three months of 2018.

Russell Quirk, founder and chief executive of Emoov.co.uk, said: “City living often comes at a premium and so an increase in the number of sales agreed across all UK cities is a strong indicator of the stabilising health of the market and a returning level of both buyer and seller interest.

“London has seen the most sustained decline of all UK cities so the early signs that downward price pressure is subsiding will be very welcome.

“While London buyers may still be waking from their Brexit hibernation, there has been an influx of stock coming onto the market and this sign of confidence from sellers in the capital should soon filter through to the buyer side of the market.

“When it does, the London market should start to find its feet again and continue to build momentum throughout the rest of the year.”

One of the reasons for weak growth in London is the fact that the level of sales is not keeping pace with new supply coming to the market. There are 1.5 homes coming to the market for every one home sold.

This is a result of weaker demand over the last 18 months and a reluctance by sellers to accept lower prices. The net result is longer sales periods where London has the longest time to sell of all UK cities at 17 weeks.

Annual house price inflation across London remains positive at +1.6% with no signs of moving into negative territory in the near term.

Prices have registered a small increase (+0.9%) over the last three months, suggesting the downward pressure on prices in London has moderated for now.

Richard Donnell, insight director at Hometrack, said: “The headline rate of city house price growth continues to be driven by above average increases in regional cities where attractive affordability and a lack of housing for sale is supporting house price inflation.

“This latest report identifies other cities such as Cardiff, Leeds, Newcastle and Sheffield as having recorded a sustained uplift in the rate of growth over the last 12 months.

“Whilst demand for housing in London has cooled over the last 18 months and the rate of house price growth has slowed there are some signs that underlying market conditions are improving.

“Last month we reported that residential values in London were falling across more than two fifths of postcodes and this has narrowed to 36% over March.”

Other cities such as Oxford and Cambridge are also experiencing supply of homes for sale growing faster than sales.

Donnell added: “Falling asking prices over the last two years, especially in central areas of London, together with deeper discounts from asking to achieved prices and greater realism on the part of sellers is likely to support sales rates and reduce the downward pressure on prices.

“2018 could be the year when housing turnover in London starts to plateau having fallen by almost a fifth since 2014.”